Discussion:My fee was discharged in bankruptcy. What do I gave to give the client?
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Discussion Forum Index --> Business Growth Community --> My fee was discharged in bankruptcy. What do I gave to give the client?
| 21 April 2009 | |
| I have a client who I did a year's work of bookkeeping and the income tax return for. After I did the work and before I was paid, the client filed for bankruptcy. My fee for this work was one of the debts discharged.
The client has reappeared and wants to pick up their stuff. My question is what do I have to give them? Somehow, I think I have to give them everything, including the return. Because since my fee was discharged in bankruptcy, it's technically been "paid". I don't think the Circular 230 rules for withholding the work product in a fee dispute and only giving the client back the information they provided me applies. I did a quick search of the yellow box and really couldn't find an answer that fits. Any thoughts? | |
| 21 April 2009 | |
| all you have to give them is their original stuff back.
you don't have to give them your work product. The fact that the debt was discharged only means that they don't have to pay you for the work you did. It doesn't mean you have to give it to them. It also means you cannot pursue them for payment. | |
| 21 April 2009 | |
| I would recommend shredding your work product so that there is no question about them getting it from you.
If the client contracts with you AFTER the bankruptcy to re-create your work product, I'd get payment up front. Personally, I don't know that I would even want this client. | |
| 21 April 2009 | |
| Wow, what a neat question!
In general, I think Kevin is correct; you have to return the client's stuff to him but you do not have to provide your work product. Keep in mind, though, that the client can't go into bankruptcy again right away, so maybe you could trust him for payment next time? Just a thought. | |
| 22 April 2009 | |
| To add a second twist, the client sent their bank a written request to send us duplicate copies of their bank statements and cancelled checks each month. Why! Because the client kept losing their originals and could never produce them when we needed them to do the accounting.
Since these are duplicates, and not originals, do we need to give them back to the client? They've been hilited, marked up, and incorporated into our workpapers since they were duplicates for our use. I guess I can copy them, but they take up a 2" file and are double sided. That's a ton of copying! | |
| 22 April 2009 | |
| I personally think that that is reasonable Luke. Your past due bill for bookkeeping has been discharged. Your new bill for copying was not included in the bankrupcty. However, I'd charge a reasonable fee by the page and not an hourly fee. | |
| 22 April 2009 | |
| Give'm a bill for $10,000 for the new work. When they refuse to pay, slap them with a 1099-C, by golly! | |
CathysOpinion (talk|edits) said: | 22 April 2009 |
| Luke, we've been burned in the past. If someone wants a year's worth of accounting, unless we know that the person is in a position to stay in business, we ask for a retainer up front. When the retainer is used up, we ask for more. | |
| 22 April 2009 | |
| Luke, those are their papers, any copies you make are for your use/records. Don't charge them for making your copies. But then why do you need copies if you're not giving them the work? | |
